TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 810
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....udicating Authority") by which I.A. No. 240 of 2022 filed by the Successful Auction Bidder-the Respondent No. 1 to withdraw from e-auction process and to refund the EMD and first installment deposited, has been allowed. 2. Brief facts of the case for deciding this Appeal are:- (i) An application under Section 10 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "The Code") was filed by the Corporate Debtor-PSL Limited and resolution process commenced in which order of liquidation was passed on 11.09.2020. (ii) The Appellant was appointed Liquidator. Appellant published sale notice for selling the corporate debtor as a going concern. A sale notice dated 27.11.2020 was issued. E auction scheduled to be held on 28.12.2020 was cancelled. Sale notice was republished on 05.01.2021 for e-auction on 28.01.2021. On 15.01.2021, Liquidator received a summon from the Directorate of the Enforcement, PMLA (ED) seeking certain documents from the Appellant in reference to investigation under PMLA Act, 2002 regarding the payment of Rs. 300 Crores sanctioned by Bank of Baroda to M/s. PSL Limited. (iii) On 25.01.2021, Liquidator received an email from the ED asking the ....
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....dator in the Delhi High Court was heard by High Court on 06th and 07th December, 2021. An application 43380 of 2021 was filed by Successful Bidder-Respondent No. 1 to be impleaded in the writ petition which impleadment was not allowed. The Delhi High Court vide its judgment and order dated 15.12.2021 allowed the writ petition filed by the Liquidator. Operative directions were issued in paragraph 102 which is to the following effect: "102. Accordingly and for all the aforesaid reasons, this writ petition shall stand allowed in the following terms. The Liquidator is held entitled in law to proceed further with the liquidator process in accordance with the provisions of the IBC. The respondent shall hereby stand restrained from taking any further action, coercive or otherwise, against the liquidation estate of the corporate debtor or the corpus gathered by the liquidator in terms of the sale of liquidation assets as approved by the Adjudicating Authority under the IBC. The Court grants liberty to the petitioner to move the Adjudicating Authority for release of the amounts presently held in escrow in terms of the interim order passed in these proceedings. Any application that may be....
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....rder passed on 02.11.2022: "1. The applicant is permitted to withdraw from E-auction process held on 09.04.2021. 2. The liquidator is directed to pay the applicant a sum of Rs. 30,00,00,000/- together with interest accrued thereon within two weeks from today. The liquidator is allowed to retain sum of Rs. 5,00,000/-towards process costs already incurred for E-auction on 09.04.2021. 3. With the above directions, the application stands disposed of. 4. Urgent certified copy of this order, if applied for, to be issued to all concerned parties upon compliance with all requisite formalities." 3. The Appellant aggrieved by this Order dated 02.11.2022 has come up in this Appeal. 4. We have heard Mr. Krishnendu Dutta, Sr. Advocate for the Appellant, Mr. Ramji Srinivasan, Sr. Advocate for the Respondent No. 1 and Mr. Neeraj Malhotra, Sr. Advocate for Edelweiss Asset Reconstruction Company Limited who was permitted to intervene. 5. Learned Sr. Counsel-Mr. Krishnendu Dutta appearing for the Appellant submits that the Respondent No. 1 failed to deposit the total bid amount within the time allowed by Order dated 08.09.2021 as modified on 05.10.2021 and as per paragraph 1(12) o....
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....is subsequent to approval of the e-auction and the time for payment of the entire bid having not over by that time the Respondent No. 1 could not be asked to make the payment of balance bid amount. The assets of the Corporate Debtor being under attachment, the Liquidator is not in a position to hand over the assets or to complete the sale. The Order dated 08.09.2021 was modified on 05.10.2021 and time to make payment shall start only from 05.10.2021. It is submitted that against the Judgment of the Delhi High Court dated 15.12.2021, Letter Patent Appeal has been entertained and Order of status quo has been passed. The sale in favour of the Respondent No. 1 can never be concluded. The Respondent No. 1 had therefore made statement before the division bench of the Delhi High Court that Respondent No. 1 wish to withdraw from e-auction which statement was recorded and Respondent No. 1 was permitted to withdraw from eauction. Hon'ble High Court having noted the aforesaid fact, the Adjudicating Authority rightly has passed an order permitting the Respondent No. 1 to withdraw from e-auction. Mr. Ramji Srinivasan further submits that the liquidator himself has made an application before the....
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.... proposed sale of the Company on going concern basis does not entail transfer of any other title, except the title which the company had on its assets as on date of transfer. The Liquidator does not take or assume any responsibility for any shortfall or defect or shortcoming in the moveable/immovable assets of the Company. The Liquidator received an email dated 25.01.2021 from the Directorate of Enforcemnt with respect to proceedings under Prevention of Money Laundering Act, 2002 requesting the Liquidator not to dispose of the assets of the Corporate Debtor. Thereafter, the Liquidator filed a Writ Petition (W.P. 3261 OF 2020) before the Hon'ble High Court of Delhi, wherein the Court stated that "the impugned e-mail and any other direction issued by the Respondent against the liquidator shall remain stayed. In order to maintain a balance and to ensure that there is no prejudice caused, the Liquidator shall proceed in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016 (hereinafter, 'IBC'). The link of the Order is ......................." 12. Respondent No. 1 was the Successful Auction Purchaser in the e- Auction held on 09th April, 2021 and auction was a....
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....tion to their impleadment. Accordingly, the Lucky Holdings Pvt. Ltd. and the Edelweiss Asset Reconstructino Company Ltd, are impleaded as respondents in the present appeal. Let an amended memo of parties be filed within ten days. Ms. Maneesha Dhir states that Lucky Holdings Pvt. Ltd. is not ready and willing to make any further payment to the Official Liquidator till her application filed before the NCLT is decided. She points out that her application is listed for hearing on 02nd February, 2022. Mr. Neeraj Malhotra, learned senior counsel for the Edelweiss Asset Reconstruction Company Ltd. states that the secured creditors are also not agreeable to the shifting of the attachment order from the immovable assets to the money to be deposited by the auction purchaser. List on 24th January, 2022 for hearing. Parties are directed to complete the pleadings and file documents, if they so desire, before the date of hearing. Till the next date of hearing, the parties shall maintain status quo qua the assets of PSL Limited, a company in liquidation." 13. We may also notice that in the order dated 24.12.2021 statement on behalf of Learned Counsel for the Successful Auction Purch....
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....on Process Information Document (Sale of Corporate Debtor as a Going Concern) by the Bidder; (ii) In case Bidder is found to have made any misrepresentation or fraud; or (iii) If Bidder is found to be ineligible to submit the bid as per the conditions set out in Section 29A of the IBC (as amended from time to time) or is found to have made a false or misleading declaration of eligibility as per the conditions set out in Section 29A of the IBC (as amended from time to time); or (iv) If the Successful Bidder attempts to reduce/renegotiate the Bid amount under any circumstances; (v) If the bidder withdraws/cancels or make any attempt to withdraw or cancel its Bid at any time; or (vi) If the Successful Bidder fails to renew the bank guarantee provided for the EMD till the final order and keep the same valid for a period of 6 months thereafter; or (vii) If the Successful Bidder fails to make the payment of the 1st installment payment within 15 days from the declaration as Successful Bidder in accordance with the terms of the E-auction process document; or (viii) If the Bidder is identified as the Successful Bidder and it fails to extend the validity of the EMD throu....
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....taken the views that as on today the liquidator is not in a position to hand over the custody of the units of the corporate debtor for which e-auction was held and the Division Bench of the High Court on 24.12.2021 has directed parties to maintain status quo. The Adjudicating Authority has rightly passed an order permitting the Successful Bidder to withdraw from the auction and directed to refund of the amount of the EMD Rs. 5 Crores and First Installment of Rs. 30 Crores. 17. Now we come to the submission of Learned Counsel for the Appellant that Adjudicating Authority ought not to have directed for refund of the amount along with the interest. Learned Counsel for the Appellant has referred to the terms and conditions of the E-Auction Sale Notice where it was contemplated that even in the case of non-approval of the sale by the Adjudicating Authority, EMD and first installment paid by Successful Bidder shall be refunded but no interest shall be payable by the Liquidator on the said amount refunded to the Successful Bidder. Clause 15.5 of the Terms and Conditions is as follows: "15.4 In the event, the Final Order is passed by the Judicial Authority rejecting the sale on going co....